Ombudsman not needed as part of Maple's acquisition of TMX, says Bertrand

05/30/2012 05:58 EDT
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Updated
07/30/2012 05:12 EDT

CP

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MONTREAL - The lead spokesman for Maple is not keen on adding an ombudsman to the TMX Group's structure once the consortium of financial institutions completes its acquisition.

Luc Bertrand told reporters Wednesday that the existing regulatory system is sufficient to deal with complaints against the practices of the TMX, which operates stock exchanges in Toronto and Montreal.

"My view of things is that the securities commissions are de facto a form of an ombudsman process," he said after speaking to the Quebec MBA Association.

"If this means another layer of regulatory oversight I don't know how that dovetails with the existing structure, which is already very thorough."

The idea to establish an ombudsman or other dispute resolution mechanism was proposed two weeks ago by John Ing, CEO of Maison Placements Canada, in a letter to the Ontario Securities Commission.

Many independent brokers are worried about the TMX Group's power once it has been acquired by Maple, a group of 13 of Canada's largest financial institutions, including the National Bank (TSX:NA), Desjardins and Caisse de depot et placement du Quebec.

Some observers have said the takeover would amount to a monopoly — something Bertrand dismissed.

Bertrand, the former head of the Montreal Exchange, said that the TMX Group (TSX:X) faced competition from alternative trading systems such as Chi-X, Pure and Omega and big American institutions such as the New York Stock Exchange and Nasdaq.

He also noted that Ontario's regulator plans to impose detailed obligations on Maple to "maintain market competition." It will also closely monitor the fees charged by the TMX and ensure that all participants have access to all trading platforms.

Bertrand said rates for the TMX and its subsidiary for clearing traded securities, CDS, will drop once the acquisition is completed.

"Assuming volumes are consistent with CDS management projections, Maple expects that on-exchange clearing fees will decrease by more than 50 per cent by 2016 as compared to 2012 prices," he said.

Bertrand said he was confident that the transaction can close before the end of July, the latest deadline set by the consortium.

Securities regulators are currently reviewing the proposed takeover and its merger with the alternative Alpha trading platform and CDS clearing house.

The Ontario Securities Commission's draft recognition orders, released earlier this month, are key to the closure of the deal because the Competition Bureau has said the orders could go some way to alleviate "serious concerns" it has with the deal.

Shares of the TMX Group closed Wednesday at $45.92, down 23 cents on the Toronto Stock Exchange.